DISQUS

Dan Graham · 1 year ago

I read that post yesterday as well and decided that I disagreed, in general, with his assertion that you can't treat supply and demand as a curve. I think that there are probably very few cases where you raise prices by 5% or 10% and you lose a substantial chunk of your customer base forever. Even if it were true that Seth's insurance company lost a substantial chunk of customers during that price increase, it's probably because the Insurance company jumped too far up the curve where the curve looks more exponential. That would be a result of anticipating the curve incorrectly -- and as you point out in your 'comment,' testing is a great way to help define the curve so you know what to expect with price changes.

I do think it could happen with trust more easily; with the most extreme cases being a bank that skimps on some software and ends up constantly giving all their customers' money away to someone else. Although car companies kill hundreds of people a year due to shotty design and they are still in business -- so who knows?

jonathan_n · 10 months ago

I'd love to read some of your ideas on how to test pricing on your customers. I really hadn't thought of it. But it absolutely makes sense. Any resources you come across in terms of price testing would be great, too.

blakeborgeson · 10 months ago

Hey Jonathan--great to see you here!

My favorite resource for discussions about versioning so far is Eric Ries, co-founder of imvu. He's incredibly smart both technically and business-wise and just started writing a fantastic blog about 4 months ago at http://startuplessonslearned.blogspot.com. I imagine you've seen links to some of his posts on hacker news. He's very prolific as well. To thin it out a bit, here's a link to a tag of split-test posts he's written: http://startuplessonslearned.blogspot.com/searc...

He talks about doing all the versioning the manual way deep within the code for the site, which is how we set it up as well. But you can use some tricks to leverage google's website optimizer if you're limited in your coding bandwidth. For example, if you've got an out-of-the-box ecommerce solution or you coded one yourself, just run some different versions of portions of your homepage that link through to duplicates of the same product, but at different prices. Then google handles all the cookies, tracking, and conversion analysis. You'll have to do some math yourself to pick the optimal price for you based on your profit margins--conversion rates is, I believe, as far as website optimizer will take you. Hope that helps!

jonathan_n · 10 months ago

Thanks!

I'd looked briefly at Google's website optimizer. I'll take a look at Eric's posts, too.

I just found the blog from your profile on Hackers and Founders. Good stuff. Keep it coming.